Speaking of authentic Chinese food, places like the Bay Area in California and Flushing in New York City often come to mind. These regions, known for their vibrant Asian communities, boast many Chinese restaurants that provide authentic flavors. In contrast, the DMV area (D.C., Maryland, and Virginia) often falls short in this regard, with Chinese cuisine that feels less connected to its roots. What are the reasons behind this? One possibility lies in demographics—fewer Asian residents across the region may contribute to a diminished demand for authenticity. However, within the DMV, Maryland still stands out. It’s widely regarded as having better Chinese food compared to D.C. or Virginia, likely because of its relatively larger Asian population.
From personal observations and countless taste tests (sadly), we identify one pattern: the farther one ventures into areas with higher concentrations of Asian residents, the more likely they are to stumble upon a Chinese restaurant that serves dishes closer to the original flavors. This could be attributed to clusters of Chinese communities, which create a stronger demand for authentic food, coupled with cheaper rent in suburban areas, allowing restaurants to focus on quality.
We are curious to explore whether this anecdotal pattern holds up to statistics. Is there a measurable relationship between the density of Asian residents and Chinese restaurant ratings? Moreover, are there spatial clusters of high-rated restaurants, and does the presence of these clusters create spillover effects, where one good restaurant inspires the success of others nearby?
These questions have implications far beyond satisfying us, crazy foodies, to find a better site in the DMV. For potential business investors or restaurant owners, understanding these relationships could guide strategic decisions about where to open new locations.
The importance of locations in economics is demonstrated by two prominent models: Hotelling’s Location Model and Salop’s Circle Model, which explore the relationship between geography, consumer behavior, and firm strategies.
“In 1929, Hotelling developed a location model that demonstrates the relationship between location and pricing behavior of firms. He represented this notion through a line of fixed length. Assuming all consumers are identical (except for location) and consumers are evenly dispersed along the line, both the firms and consumers respond to changes in demand and the economic environment. Firms do not exercise variations in product characteristics; firms compete and price their products in only one dimension, geographic location. Therefore, traditional usage of this model should be used for consumers who perceive products to be perfect substitutes or as a foundation for modern location models.”
For more details, see this website.
Hotelling’s model predicts that businesses should cluster in the middle of a market to maximize their customer base. For example, in a linear spatial market, if one restaurant exists in a neighborhood, a competing restaurant might choose to locate directly next to it. This way, the market splits into halves, with each business capturing customers on its side.
This model assumes that businesses compete solely on geographic location, with products being perfect substitutes. The idea parallels the Median Voter Theorem, where competitors slightly undercut each other until they meet equilibrium.
“Similar to the previous spatial representations, the circle model examines consumer preference with regards to geographic location. However, Salop introduces two significant factors: 1) firms are located around a circle with no endpoints, and 2) it allows the consumer to choose a second, heterogeneous good.”
For more details, see this website.
The Salop model takes an opposing perspective. It proposes that businesses should avoid clustering and instead space themselves to maximize accessibility for the greatest number of consumers. It ensures geographic diversity and minimal overlap in customer bases.
The data for this study is sourced from two primary platforms:
The following steps were taken to ensure alignment with the 2022 demographic data:
Filtering by Year:
Creating Asian Density Variable:
\[ \text{Asian Density} = \frac{\text{Asian Population}}{\text{Total Population}} \]
Geographic Focus (Commuting Area):
After cleaning, the main dataset was then converted into a spatial data frame using longitude and latitude coordinates with the WGS 84 projection (CRS 4326). Maryland block group boundaries for 2022 were retrieved. Both datasets were reprojected to a consistent CRS to ensure spatial compatibility for our analysis.
In [1]:
options(warn = -1)
suppressMessages({
library(sp)
library(sf)
library(spdep)
library(lmtest)
library(sandwich)
library(ggplot2)
library(spatialreg)
library(tmap)
library(tigris)
library(dplyr)
library(tidyverse)
library(leaflet)
library(units)
library(readxl)
library(mapview)
})In [2]:
data <- read.csv("restaurant.csv")
data <- na.omit(data)
data_sf <- st_as_sf(data, coords = c("longitude", "latitude"), crs = 4326)
md_block_groups <- block_groups(state = "MD", year = 2022, progress_bar = FALSE)
md_block_groups <- st_transform(md_block_groups, crs = st_crs(data_sf))
data_sf <- st_transform(data_sf, crs = st_crs(md_block_groups))A histogram was generated to visualize the distribution of restaurant ratings in Maryland.
Indeed, Maryland Chinese restaurants are generally well-rated. Most Chinese restaurants have ratings concentrated between 3.5 and 4.5, with a peak around 4.0. Ratings below 3.0 and above 4.5 are rare, following a normal distribution.
In [3]:
ggplot(data, aes(x = rating)) +
geom_histogram(
binwidth = 0.25,
fill = "#56B4E9",
color = "black"
) +
theme_classic() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
axis.title = element_text(size = 14),
axis.text = element_text(size = 12)
) +
labs(
title = "Rating Distribution for Maryland Chinese Restaurants",
x = "Rating",
y = "Count"
)
The following map overlays restaurant data on Maryland block group boundaries, with restaurants color-coded by their ratings.
It shows a clustering of restaurants in urbanized and suburban areas, particularly around Baltimore and the D.C. metropolitan area. This finding leads us to narrow down our restaurant dataset to a commuting area in the later section 3.1.2. Ratings are distributed across locations. It’s hard to find a clear trend of higher ratings clustering in specific regions.
In [4]:
data_with_coords <- data_sf %>%
mutate(
x = st_coordinates(.)[, 1],
y = st_coordinates(.)[, 2]
)
ggplot() +
geom_sf(data = md_block_groups, color = "gray60", fill = NA, size = 0.4) +
geom_sf(data = data_sf, aes(color = as.factor(rating)), size = 2, alpha = 0.8) +
geom_text(
data = data_with_coords,
aes(x = x, y = y, label = reviews),
size = 3, vjust = -1, check_overlap = TRUE, color = "black"
) +
labs(
title = "Maryland Chinese Restaurants and Locations",
color = "Rating"
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
legend.title = element_text(size = 12),
legend.text = element_text(size = 10),
axis.text = element_blank(),
axis.title = element_blank(),
axis.ticks = element_blank(),
panel.grid = element_blank(),
panel.background = element_blank()
)
This graph displays the distribution of Asian density in Maryland. The distribution is right-skewed, in the range from 0 to 0.5 mostly, with only a few outliers larger than 0.5.
In [5]:
ggplot(data, aes(x = AsianDensity)) +
geom_histogram(
binwidth = 0.05,
fill = "#009E73",
color = "black"
) +
theme_classic() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
axis.title = element_text(size = 14),
axis.text = element_text(size = 12)
) +
labs(
title = "Asian Density Distribution in Maryland",
x = "Asian Density",
y = "Count"
)
We use a heatmap to present a geographic visualization of average Asian density by block group. Following the pattern revealed in the previous graph, we used the scale from 0 to 0.5. The map also shows that areas with higher Asian density tend to be located in commuting zones, like the rating distrubution.
In [6]:
asian_density_summary <- data_sf %>%
st_drop_geometry() %>%
group_by(GEOID) %>%
summarize(AsianDensity = mean(AsianDensity, na.rm = TRUE)) %>%
ungroup() %>%
mutate(
GEOID = as.character(GEOID),
GEOID = str_pad(GEOID, width = 11, side = "left", pad = "0")
)
md_block_groups_merged <- md_block_groups %>%
left_join(asian_density_summary, by = "GEOID") %>%
mutate(GEOID_prefix = substr(GEOID, 1, 9)) %>%
group_by(GEOID_prefix) %>%
summarize(
geometry = st_union(geometry),
AsianDensity = mean(AsianDensity, na.rm = TRUE)
)
ggplot(data = md_block_groups_merged) +
geom_sf(aes(fill = AsianDensity), color = "gray80", size = 0.2) +
scale_fill_gradient(
low = "white",
high = "darkred",
na.value = "white",
limits = c(0, 0.5)
) +
labs(
fill = "Avg Asian Density\n(capped at 0.5)",
title = "Merged Asian Density by Block Group"
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
legend.title = element_text(size = 12, face = "bold"),
legend.text = element_text(size = 10),
legend.key.size = unit(0.5, "cm"),
panel.grid = element_blank(),
panel.background = element_blank(),
axis.text = element_blank(),
axis.title = element_blank(),
axis.ticks = element_blank()
)
Both the restaurant ratings and Asian density show a concentration in the commuting area. Therefore, we narrow down our vision to this specific region for this section.
In [7]:
restaurant_data <- readxl::read_excel("filtered.xlsx")
restaurant_data <- na.omit(restaurant_data)
restaurant_sf <- st_as_sf(restaurant_data, coords = c("longitude", "latitude"), crs = 4326)
md_counties <- counties(state = "MD", year = 2022, class = "sf", progress_bar = FALSE)
counties_of_interest <- c("Montgomery", "Prince George's", "Calvert", "Charles", "St. Mary's",
"Baltimore city", "Anne Arundel", "Baltimore", "Carroll", "Harford",
"Howard", "Queen Anne's")
selected_counties <- md_counties[md_counties$NAME %in% counties_of_interest, ]
restaurant_sf <- st_transform(restaurant_sf, crs = st_crs(selected_counties))
selected_counties <- st_transform(selected_counties, crs = st_crs(restaurant_sf))
restaurant_sf_cropped <- st_intersection(restaurant_sf, st_union(selected_counties))
maryland_block_groups <- block_groups(state = "MD", year = 2022, progress_bar = FALSE)
asian_density_summary <- restaurant_data %>%
group_by(GEOID) %>%
summarize(AsianDensity = mean(`AsianPopulation` / `TotalPopulation`, na.rm = TRUE))
maryland_block_groups <- maryland_block_groups %>%
mutate(GEOID = as.character(GEOID)) %>%
left_join(asian_density_summary, by = "GEOID")
maryland_block_groups <- st_transform(maryland_block_groups, crs = st_crs(selected_counties))
maryland_block_groups_cropped <- st_intersection(maryland_block_groups, st_union(selected_counties))This graph shows the restaurant locations within metropolitan areas, with each blue dot representing a restaurant. The high concentration of restaurants in the commuting area results from the narrowing down process.
In [8]:
ggplot() +
geom_sf(data = selected_counties, fill = "white", color = "gray60", size = 0.3) +
geom_sf(data = restaurant_sf_cropped, color = "#56B4E9", size = 2, alpha = 0.35) +
labs(
title = "Restaurant Locations in Washington-Baltimore Corridor",
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
plot.caption = element_text(size = 10, hjust = 1, face = "italic"),
panel.grid = element_blank(),
panel.background = element_blank(),
legend.position = "none",
)
We also present it with the mapview package for a more interactive purpose. You may find the rating for each restaurants.
In [9]:
mapview(selected_counties, color = "gray", alpha = 0.3) +
mapview(
restaurant_sf_cropped,
zcol = "rating",
col.regions = colorRampPalette(c("#56B4E9", "#E69F00", "#D55E00"))(100),
cex = 4,
alpha = 0.7
)The Asian density by block group based on the narrowed-down dataset clearly shows that higher Asian density is concentrated in the middle part.
In [10]:
maryland_block_groups_merged <- maryland_block_groups_cropped %>%
mutate(GEOID_prefix = substr(GEOID, 1, 10)) %>%
group_by(GEOID_prefix) %>%
summarize(
geometry = st_combine(geometry),
AsianDensity = mean(AsianDensity, na.rm = TRUE)
)
asian_density_map <- ggplot(data = maryland_block_groups_merged) +
geom_sf(aes(fill = AsianDensity), color = "gray80", size = 0.2) +
scale_fill_gradient(
low = "white",
high = "darkred",
na.value = "white",
limits = c(0, 0.5)
) +
labs(
fill = "Avg Asian Density\n(capped at 0.5)",
title = "Asian Density by Block Group"
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 16, face = "bold"),
legend.title = element_text(size = 12, face = "bold"),
legend.text = element_text(size = 10),
legend.key.size = unit(0.5, "cm"),
panel.grid = element_blank(),
panel.background = element_blank(),
axis.text = element_blank(),
axis.title = element_blank(),
axis.ticks = element_blank()
)
print(asian_density_map)
Before investigating the relevance of spatial effects in our hypothesis, let’s try a non-spatial regression model first: it may simply be that the spatial autocorrelation in rating of restaurants is entirely explained by the Asian density in Maryland.
To investigate whether the ratings of Chinese restaurants in Maryland are influenced by local demographic and socioeconomic factors, we fit a “standard” OLS model to estimate the variables of our interests:
\[ \text{Rating}_i = \beta_0 + \beta_1 \cdot \text{AsianDensity}_i + \beta_2 \cdot \text{MedianHouseIncome}_i + \beta_3 \cdot \text{PublicTransport}_i + \epsilon_i \]
In [11]:
asian_density_summary <- asian_density_summary %>%
mutate(GEOID = as.character(GEOID))
restaurant_data <- restaurant_data %>%
mutate(GEOID = as.character(GEOID)) %>%
left_join(asian_density_summary, by = "GEOID")In [12]:
ols_model <- lm(rating ~ AsianDensity + MedianHouseholdIncome + PublicTransportationCommuters ,
data = restaurant_data)
summary(ols_model)
Call:
lm(formula = rating ~ AsianDensity + MedianHouseholdIncome +
PublicTransportationCommuters, data = restaurant_data)
Residuals:
Min 1Q Median 3Q Max
-2.85964 -0.21188 0.04846 0.28832 0.91235
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 3.875e+00 5.310e-02 72.980 <2e-16 ***
AsianDensity 3.974e-01 1.650e-01 2.408 0.0164 *
MedianHouseholdIncome -3.192e-04 2.379e-04 -1.342 0.1803
PublicTransportationCommuters 3.363e-07 4.635e-07 0.726 0.4684
---
Signif. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
Residual standard error: 0.4269 on 515 degrees of freedom
Multiple R-squared: 0.01665, Adjusted R-squared: 0.01092
F-statistic: 2.906 on 3 and 515 DF, p-value: 0.03425We can see from the simple OLS regression that higher Asian population density is positively associated with restaurant ratings (p = 0.0164). For every 1-unit increase in the percentage of Asian residents in an area, the restaurant rating is associated with about 0.397 points increase on average.
But median household income and the number of public transport commuters in the model are insignificant.
In [13]:
residuals <- resid(ols_model)
fitted_values <- fitted(ols_model)
ggplot(data = data.frame(fitted_values, residuals), aes(x = fitted_values, y = residuals)) +
geom_point(color = "#D55E00", alpha = 0.7) +
geom_hline(yintercept = 0, color = "#0072B2", linetype = "dashed", size = 0.8) +
labs(
title = "Residuals vs. Fitted Values",
x = "Fitted Values",
y = "Residuals"
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 14, face = "bold"),
axis.title = element_text(size = 12),
axis.text = element_text(size = 10)
)
We create a scatter plot of residuals vs. fitted values to assess the OLS model’s fit and residual distribution. The residuals are evenly distributed around a zero line with no clear patterns, indicating a good fit. But we are still curious if residuals from OLS estimation exhibit a relationship, due to spatial autocorrelation with effective tools.
Moran’s 𝐼 is used to test if our error terms are independent of the spatial distribution. In other words, we are checking whether the residuals we just plotted are randomly distributed across space or show some spatial pattern.
To define neighbors for Moran’s 𝐼, a spatial weights matrix is used to represent relationships between restaurants. Neighbors are defined using 5 nearest neighbors, linking each restaurant to its five closest neighbors by geographical coordinates.
In [14]:
restaurant_sf <- st_as_sf(restaurant_data, coords = c("longitude", "latitude"), crs = 4326)
coords <- st_coordinates(restaurant_sf)
k_nb <- knn2nb(knearneigh(coords, k =5))
listw_k <- nb2listw(k_nb, style = "W")In [15]:
moran_rating <- moran.test(restaurant_sf$rating, listw_k)
print(moran_rating)
Moran I test under randomisation
data: restaurant_sf$rating
weights: listw_k
Moran I statistic standard deviate = 2.4501, p-value = 0.007141
alternative hypothesis: greater
sample estimates:
Moran I statistic Expectation Variance
0.0605012488 -0.0019305019 0.0006492981 ols_model <- lm(rating ~ AsianDensity + MedianHouseholdIncome + PublicTransportationCommuters,
data = restaurant_data)
residuals_ols <- resid(ols_model)
moran_residuals <- moran.test(residuals_ols, listw_k)
print(moran_residuals)
Moran I test under randomisation
data: residuals_ols
weights: listw_k
Moran I statistic standard deviate = 1.3986, p-value = 0.08097
alternative hypothesis: greater
sample estimates:
Moran I statistic Expectation Variance
0.0337077068 -0.0019305019 0.0006493258 For restaurant ratings, Moran’s 𝐼 = 0.0605 indicates a positive spatial autocorrelation. Restaurants with similar ratings tend to be geographically clustered, although the effect is not very strong. And the observed clustering is unlikely due to random chance (p = 0.0071).
However, for OLS regression residuals, Moran’s 𝐼 = 0.0338 shows weaker spatial autocorrelation (p = 0.0809).
Our OLS model has accounted for most of the spatial patterns in the data.
In [16]:
moran_lag <- lag.listw(listw_k, restaurant_sf$rating)
moran_data <- data.frame(
rating = restaurant_sf$rating,
spatial_lag = moran_lag
)
moran_data <- moran_data %>%
mutate(
rating_std = scale(rating, center = TRUE, scale = TRUE),
spatial_lag_std = scale(spatial_lag, center = TRUE, scale = TRUE)
)
moran_scatterplot <- ggplot(moran_data, aes(x = rating_std, y = spatial_lag_std)) +
geom_point(color = "#D55E00", alpha = 0.7) +
geom_smooth(method = "lm", color = "#0072B2", se = FALSE) +
labs(
title = "Moran's I Scatterplot",
x = "Standardized Rating",
y = "Spatial Lag of Standardized Rating"
) +
theme_minimal() +
theme(
plot.title = element_text(hjust = 0.5, size = 14, face = "bold"),
axis.title = element_text(size = 12),
axis.text = element_text(size = 10)
)
print(moran_scatterplot)`geom_smooth()` using formula = 'y ~ x'
The spacial autocorrelation is significant and the residual autorrelation is not significant - our OLS model has already captured the most.
But we still try to include an additional spatial regression (SAR) to test if there’s any spacial patterns unexplored. The purpose of SAR is to model and account for spatial dependencies or spatial relationships in the data that OLS cannot address. It helps to answer if restaurant ratings in one area are influenced by ratings in neighboring areas.
In [17]:
sem_model <- lagsarlm(rating ~ AsianDensity ,
data = restaurant_sf,
listw = listw_k)
summary(sem_model)
Call:lagsarlm(formula = rating ~ AsianDensity, data = restaurant_sf,
listw = listw_k)
Residuals:
Min 1Q Median 3Q Max
-2.923506 -0.207462 0.043672 0.284154 0.897993
Type: lag
Coefficients: (asymptotic standard errors)
Estimate Std. Error z value Pr(>|z|)
(Intercept) 3.45152 0.27237 12.6723 < 2e-16
AsianDensity 0.33504 0.16014 2.0921 0.03643
Rho: 0.1133, LR test value: 2.8326, p-value: 0.092369
Asymptotic standard error: 0.069451
z-value: 1.6314, p-value: 0.1028
Wald statistic: 2.6615, p-value: 0.1028
Log likelihood: -292.659 for lag model
ML residual variance (sigma squared): 0.1805, (sigma: 0.42485)
Number of observations: 519
Number of parameters estimated: 4
AIC: 593.32, (AIC for lm: 594.15)
LM test for residual autocorrelation
test value: 9.2413, p-value: 0.0023662The SAR shows that Asian population density indeed significantly impacts restaurant ratings.
However, the weak significance of spatial lag coefficient (Rho) suggests that spatial dependence is present (0.1133) but not strong (p = 0.092).
Our result shows that the higher Asian population density positively affects Chinese restaurant ratings. Also, high-rated Chinese restaurants exhibit spatial clustering. However, the spatial clustering of high-rated restaurants does not create spillover effects on nearby establishments.
In the DMV area, the data suggests some level of clustering. High-rated Chinese restaurants tend to appear near others, aligning partially with Hotelling’s idea of businesses grouping to share the market demand efficiently.
However, our finding of no significant spatial spillover effects indicates that the new restaurant’s presence doesn’t detract from the ratings of the existing restaurant. We might have observed sufficient demand in the market for restaurants, supporting Hotelling’s idea that businesses can coexist and compete successfully in proximity.
Our findings don’t align strongly with Salop’s model because clustering occurs rather than spacing out. And the lack of a strong spillover effect from proximity further challenges Salop’s prediction.
The lack of negative spillover effects and the persistence of clustering may indicate a “sufficient demand” scenario. In this case, clustering is sustainable because the density of demand (in areas with higher Asian populations) can support multiple businesses.
Our finding could contrast with markets like Flushing, NY, where high demand might already be saturated, and adding a new business could lead to a redistribution of customers or a drop in ratings.
Our dataset only contains Maryland residents, and it can be more interesting to investigate whether the no spillover effect holds in other regions, such as the Bay Area or Flushing, where the Asian population density is much higher.
Besides, it can be analyzed how this pattern changes with varying levels of restaurant quality, as lower-rated restaurants may face stronger competition effects than higher-rated ones.
Our evidence finds that Asian density significantly and positively affects Chinese restaurant ratings. But no significant spillover effect is observed.